August 24, 2010

KL Energy and Petrobras America have entered into a Joint Development Agreement to jointly optimize KL Energy's technology for producing cellulosic ethanol from sugarcane bagasse.

The latest generation of KL Energy's process design provides for substantial enhancements over the first generation, implemented in 2008 at the company's demonstration plant in Upton, Wyoming using Ponderosa Pine feedstock, including the ability to be optimized for multiple feedstocks.

As part of this agreement, Petrobras will provide US$ 11 million to adapt KL Energy's demonstration facility to the use of Bagasse, validate the optimized process by producing cellulosic ethanol and bio-lignin from Bagasse in multiple campaigns and license the technology.

In parallel, Petrobras and KL Energy will jointly work on an industrial scale Bagasse based cellulosic ethanol plant project that shall be fully integrated into a sugarcane mill belonging to the Petrobras Group in Brazil slated to go on stream in 2013.

The agreement, which has an initial term of 18 months and provides for mutual exclusivity in the area of developing cellulosic ethanol from Bagasse, provides Petrobras with the option to enter into a technology license for the use of KL Energy's technology within Petrobras Group assets.